The Great Recession has created a new phenomenon: young lawyers who want to start solo practices after either being laid off from big law firms, or deciding as soon as law school graduation that the big firm life isn’t worth it for them.
Some lawyers who reject the 2,000-2,500-plus billable hours that are the rule at many big firms may see solo practice as a means to better work/life balance. But this is not a typical motivation. Few lawyers are adverse to hard work. Successful big firm lawyers work long hours and are focused about what they do. If they pursue a small firm setting, it is not that they want a life of leisure – it reflects a greater desire to pursue their passion. Lawyers contemplating such a change should ask themselves why they went to law school and became a lawyer? Do they still love the law and enjoy helping people? The answer determines success in solo practice.
By contrast, the issue for law school graduates looking to go solo is different. Students come out of law school with little practical understanding of how a practice works, whether that includes training in effective client service and law practice management techniques, or basic knowledge about the operation of the firm as a business (budget, collections, profit, loss). There is also the issue of technical competence at the law: in highly personal, difficult issues like bankruptcy or divorce or tax problems, what kind of representation will their clients receive from young lawyers who are getting their on-the-job training by hanging out their shingles
Practice: Why and What
In truth, the solo lawyer at any level of experience needs all the traits of an entrepreneur: motivation, acceptance of risk, resiliency, commitment, persistence. To decide if you have what it takes, do a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of yourself to make certain that you’re ready to operate your own firm. Any such analysis will to some extent be subjective, but it helps you decide if opening your own practice is right for you
The decision makes sense more for some practice areas than others. It’s easiest to start a new solo practice for specialties where capital requirements are less, and where it’s easier to reach prospective clients who have more urgent, immediate and personal needs. Practice areas that meet these parameters are where “the rubber meets the road,” areas such as personal injury, family law, bankruptcy, immigration, personal real estate and the like.
Finances: Tips and Traps
In any practice, managing money is your number one consideration for success. The new solo should have a personal/professional expense hierarchy with these levels: practice needs, personal needs, savings for slow periods or emergencies, and a bonus after all other expenses are met. Practice needs always come first, and personal needs should be the most flexible category. Personal needs, as covered by the lawyer’s “draw,” should initially be the minimum expense necessary to maintain a basic (not lavish) standard of living. Avoid committing to extensive obligations that cannot be reduced. The conservative rule of thumb is to have an adequate cash reserve covering a minimum six months of living expenses if no draws or salaries can be taken out of the firm. While this may be ideal, it’s clear in today’s world that few maintain such a cushion.
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